Providing access to people earning a few dollars a day demands a radically new mindset in terms of innovation and access.

A receptionist speaks on a telephone inside the Novartis India headquarters in Mumbai on the day India's top court dismissed Swiss drugmaker Novartis AG's attempt to win patent protection for a cancer drug. (April 1, 2013)

What the decision really represents is a formalization and reflection of a large undercurrent of resistance, particularly but not exclusively in developing countries, that view incremental patenting of pharmaceuticals as contradictory to public health interests. As such, where India leads many other nations may follow, absent new approaches to enhancing access to medicines.

The question is whether the Indian decision is as bad as some make it out to be. It is instructive to look at what the Indian patent case represents, and what it does not.

First, given that the court decision was limited to relatively minor changes to existing drugs, the widespread speculation that the decision would have an adverse impact on new drug research is simply overstated. Novel drugs can still be patented in India much the same as in Canada. If anything, stemming “evergreening,” a practice whereby companies extend patent life of their drugs by minor modifications, should have the opposite effect of encouraging greater investments into novel drugs.

Since 2006, when the Novartis case in India began, both Indian and foreign pharmaceutical and biotechnology companies have substantially enhanced their investments into drug and vaccine development in the country.

Second, the argument that incremental innovations are devoid of real value to companies if they are not patentable, and hence are not likely to be pursued, is again a specious one. To the extent that they make drugs easier to swallow, quicker to dissolve, reduce frequency of intake and so forth, they add value for the consumer. We are constantly exposed to company advertisements that use these features to distinguish and promote specific drugs.

The real imbalance arises when companies seek full rent — i.e. market exclusivity — where partial rent is what is owed. Imagine if you had to pay full price for your computer’s operating system every time a minor update was made available. In India, as in much of the rest of the developing world, aiming to achieve such rents for minor changes in drugs or vaccines will continue to be a losing proposition from a revenue-generation perspective, notwithstanding legal victories that may be achieved.

Third, had Novartis actually won the case, the bottom-line results for the company, and others in a similar situation, would likely not have changed very much. Few patients in India would or could pay $2,200 a month for a single drug. It is true that not all drugs cost this much, but in poor countries even 10 per cent of this amount is unaffordable for hundreds of millions of patients. They might achieve access through compulsory licensing, which governments occasionally invoke under situations deemed medical emergencies. However, since this is an uncommon practice, the more likely outcome is that most patients would simply go without.

What does this experience tells us about pharmaceutical innovation?

It says that providing access to people earning a few dollars a day demands a radically new mindset in terms of innovation and access. This is especially so if we consider that the average cost of developing a new drug stands at $1 billion to $2 billion U.S. The result is that a society like India has to dedicate the equivalent of the full annual income of about 18 people to pay the drug costs of a single individual with a single disease over a single year. This is the situation India faced with the Gleevac patent application.

The same drug would have to cost $700,000 per patient per year (not the current $40,000-$80,000) for us to feel the burden that Indians face. Would Canada be tempted to take a second look at our patenting system under such circumstances? You bet. Indeed, it may not be long before developed world governments, cash-strapped and challenged by skyrocketing health-care costs, also consider following in India’s footsteps.

Looking beyond the immediate situation, Canada has tremendous capabilities in pharmaceutical and other health sciences that we should leverage toward a new innovation agenda that can address developing world diseases and enhance innovation productivity. We can do so while ensuring benefits for Canada, in part by engaging with innovators in places like India.

Sadly, we may be too busy trying to resuscitate an old innovation model that is increasingly broken not just for the global poor, but also for the global rich.

Rahim Rezaie is a research fellow with the Asia Pacific Foundation of Canada and the Munk School of Global Affairs.

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